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Cheese company finds a home on the PlainsBy Sara Weller The Texas Panhandle and surrounding areas are experiencing an economic boost as Hilmar Cheese Company prepares to open a new cheese processing facility north of Dalhart. "What we are building now," says Hilmar Cheese Dalhart Site Manager David Ahlem, "is a plant that has the capacity to produce up to 500,000 pounds of cheese per day. That is the equivalent of about 5 million pounds of milk per day." However, the plant will start production in October at about half capacity, Ahlem says. He explains that they will open using about 2 million pounds of milk per day and then grow from there as the demand for cheese grows and the milk supply is available. "We are a demand-driven company so if there is a strong demand for cheese we may grow faster, if not it may be slower. Right now, there is a very strong demand for cheese," he says. At half capacity they will employ about 120 people, but that will grow as production increases, Ahlem says. "I would expect our employee number to grow to 350 employees over the next ten years." The facility will produce 40-pound blocks of cheese that will be shipped to food service and wholesale customers that slice and package the cheese. They also produce milk protein concentrate that is used as a nutritional supplement for humans in protein bars and nutritional drinks, and for livestock feed. Hilmar Cheese Company originates in Hilmar, Calif., where it is the largest single-site cheese processing facility in the world. It is owned by eleven dairy families. They produce about 1.5 million pounds of cheese per day. Ahlem explains they were at the point where they couldn't grow anymore in terms of space but their customers were growing and asking for more cheese. Because of their growing customer base in the East they needed to expand closer to those customers. So, why would a facility of this magnitude choose Dalhart, Texas, a small town of approximately 7,000 people? As Ahlem describes there are three main reasons. The first is that the Dalhart area is agriculture friendly. "For this business to grow, dairies have to be able to grow alongside it," he says. "This is a great place to raise dairy cattle and produce milk." The second reason is that there is a "very stable regulatory environment." And the third is that Texas is a business-friendly environment. Texas obviously isn't in the East. But, Ahlem says, "It was one of the farthest places east we could move closer to population that was ag friendly and you could still raise dairy cattle in the long term. People here are used to seeing cows." The High Plains Dairy Council played a role in helping Hilmar choose Dalhart, Ahlem says. The High Plains Dairy Council is an organization that acts like a private economic development corporation according to Executive Director David Moore. Moore says the purpose of the organization is to promote the Northwest Texas Panhandle as a relocation option for dairies and dairy-related businesses. Hilmar Cheese contacted Moore about three and a half years ago while they were exploring other areas to expand. Moore says about a month later some of the owners came out and he showed them around the area and discussed the opportunities in Dalhart. It was one of 25 areas in five states Hilmar was considering. Moore says he and the High Plains Dairy Council were excited to learn Hilmar had chosen Dalhart. He explains that the area already provided a great option for relocation of dairies. "Right now many dairies in other parts of the U.S. are predominantly located around large metropolitan areas and they're under a lot of scrutiny and pressure because urbanization drives environmental policy," Moore says. Moore continues, "What we needed to really solidify our ability to attract dairies was a local market for the milk." Because in the entire region, from southwest Kansas through the Panhandles of Oklahoma and Texas, dairymen must ship their milk long distances to metropolitan areas where there are a lot of people to drink the milk. Now with Hilmar in the area, Moore says, "We have created that great environment to attract dairies and we have all the pieces of the puzzle." Dairies are now able to save of money in freight without having to ship milk to the Dallas, Ft. Worth, Houston and Oklahoma City markets. Another advantage for dairy producers is Hilmar's commitment to its milk suppliers. Hilmar contracts directly with producers. Ahlem explains, "We have direct relationships with independent producers. We are looking for dairy producers who produce high-quality milk who will be here long term. We strongly believe in long-term, mutually-beneficial relationships." He adds, "It is a win-win relationship where we do better and they do better, which makes it a good, happy marriage." It will take a lot of relationships to produce enough milk for Hilmar to operate the facility at full capacity. Five million pounds of milk would represent about 70,000 to 75,000 cows, Ahlem says. Because of the variability of dairy size, it's hard to estimate how many dairies that is, but on average about 35 to 40. In order to open in October they have contracted with about 10 to 15 dairies because some of them are fairly large, Ahlem says. Because of the quantity of dairies involved, Hilmar's impact is going to be much larger than the immediate Dalhart area, both Moore and Ahlem agree. Ahlem says, "We will get milk from dairies as far as 150 miles away, and they won't be all together, they will be spread out in that 150 mile radius." Moore says there is not enough dairies in the immediate Dalhart area to supply the amount of milk Hilmar needs. "They will be getting some milk down by Clovis, N.M., and the Hereford, Texas, area and some from up at southwest Kansas to get started," he says. But that may change as more dairies evolve in the area. Moore says they have had a lot of interest in dairies relocating. In fact, they have had a lot of international interest, including families from Denmark, New Zealand and Canada. This influx of industry to the area is not exclusive to dairies though. One of Hilmar's largest customers, Pacific Cheese Company, announced earlier this year that they will be building a facility in Amarillo to further process the cheese they buy from Hilmar. That is expected to open next year. Moore emphasizes the need for labor this economic development is causing. "As this industry continues to grow, the need for labor is really probably going to be one of our big limiting factors," he says. "People who are looking for jobs from doctors to attorney to schoolteachers to working at McDonald's--we have opportunities right now at all of those levels." Ahlem says they are hiring employees left and right and are having good luck. "We expected that to be a challenge," he says. Right now most of the remaining positions are entry level and Ahlem says are what he considers very good jobs. "We provide a great opportunity for people." He adds, "As we grow, there is going to be more opportunities here for career-type jobs with exceptional benefits." Ahlem, who has worked for Hilmar for about eight years since starting as an intern, relocated to Dalhart from Hilmar, Calif. He wants to emphasize that they are very happy to be here. "We definitely know that Dalhart is the right community and we have been impressed with the warm welcome we have received. We are looking forward to a long-term relationship in the Panhandle." Date: 8/8/07
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